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Non Resident becomes Resident.

Krishna (Assistant) (633 Points)

22 January 2023

Sir
Assessee is a R&OR during the year as per IT Act but as per FEMA he is PROI i.e. stayed in India for more than 182 days but left India for employment purposes.
My Question is whether interest earned on NRE FDs is taxable or exempt us 10(4)(ii)?. As per this sec. if interest earned on NRE FDs made as per FEMA 1999 & by PROI then Interest is exempt. Please clarify this
issue. Thanks

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11 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 23 January 2023

When did he left for employment?

Or when he returned back?

Krishna (Assistant) (633 Points)
Replied 24 January 2023

Total 3 journeys during the year. During the year he cumulatively stayed for 189 days in India in all 3 journeys.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 24 January 2023

Whether he was on job (in foreign company, during his visits to India) continuously?

Krishna (Assistant) (633 Points)
Replied 24 January 2023

Thanks Sir; for giving reply to all doubts
1. He has been working abroad since 2005. On 31 Mar 17 he left India again he came to India on 03 Jun 17 & left India on 6th oct 2017 again he came back to India on 5th Dec. 2017 & left India on 10th Feb 2018. So around 194 days he was in India for 2017-18.
He is leaving India for employment & also coming to India not for employment. So I think he satisfied both the conditions; he was a person resident outside India as per FEMA for full year even though he stayed in India for more than 182 days.
2. As per income tax he is R & OR bcoz he stayed in India for more than 182 days n he satisfied both additional conditions. Unluckily he is resident only for 2 years in last 10 preceding PYs & thus he satisfy additional condition. He received salaries abroad there his tax was not deducted & only because he resided in India for 12 days more he is required to pay tax.
3. Actually he received notice us 148 for income escaping assessment i.e. he made few FDs. Now that 234 A B C interest is double than basic tax figures.
4. Sir; if we declared exact income then also penalty notice us 270A will be issued ? 50% of tax. I don't think that they will levy 200% because it's not misrepresenting. I think if we give them the proper explanation then that penalty can be deleted. ?
Sir; Plz reply for this message

1 Like

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 24 January 2023

The conditions get satisfied, only if he had been in continuous service abroad, and had been in India, for vacation or leave.

Otherwise, it will be very difficult to justify the conditions as per FEMA act.

Krishna (Assistant) (633 Points)
Replied 24 January 2023

Okay sir thank you

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 25 January 2023

You are welcome.

Krishna (Assistant) (633 Points)
Replied 25 January 2023

Dhirajlal sir; small mistake from my side. To check the residential status as per FEMA; we need to check the no. of days stays of preceding financial year. That is for FY 2017 18 we need to check the no. of days of 2016 17. In 2016 17 he stayed for less than 182 days means he is PROI as per FEMA for 2017 18. So interest is exempt us 10(4)(ii) ?